A savings account is a great way to grow your money for any number of goals, whether it's a new car, a new home or retirement. The funds you deposit earn interest, although how much you earn and how much access you have to your money depends on the kind of account you open.
Traditional savings accounts, high-yield savings accounts (HYSAs), certificates of deposit (CDs) and money market accounts all operate somewhat differently and have unique benefits and drawbacks.
Learn the difference among these interest-earning banking products to help you decide which one best fits your saving needs.
Traditional savings account
Traditional savings accounts are typically offered by large national brick-and-mortar banks with hundreds of physical branches, a large network of no-fee ATMs and a full range of banking products, including checking accounts, credit cards, mortgages and more.
Traditional savings accounts are a solid option for consumers who prioritize in-person customer service and easy access to their funds. They have much lower interest rates than high-yield savings accounts but you can usually make withdrawals at a nearby branch or with an ATM/debit card.
Bank of America Advantage Savings account comes with access to more than 4,000 branches and 16,000-plus ATMs, making it one of our top picks for traditional savings accounts. The $8 monthly maintenance fee is waived for the first six months, and can be continue to be waived if you keep a $500 minimum daily balance, have a Bank of America Advantage Relationship Banking® account or are under 25.
Bank of America Advantage Savings
Annual Percentage Yield (APY)
0.01%, with option to increase if a Preferred Rewards member
Minimum balance
$100 to open
Monthly fee
$8 per month, with options to waive. New account holders get the first six months with no monthly fees
Maximum transactions
Up to 6 free withdrawals or transfers per statement cycle
Excessive transactions fee
$10 when you make over 6 withdrawals in a month
Overdraft fees
Overdraft protection when you link your savings account to your checking account
Offer checking account?
Yes
Offer ATM card?
Yes, if have a Bank of America checking account
Terms apply.
Pros
- Earn cash back on select deals at stores, restaurants and more through BankAmeriDeals®
- Save money from everyday purchases through Bank of America's Keep the Change® program
- Get rewarded for having big balances through Bank of America's Preferred Rewards program
- Access Erica® for customized and real-time virtual financial assistance
- Bank of America has a vast network of ATMs
- No monthly maintenance fee for first six months on new accounts
- Up to 6 free withdrawals or transfers per statement cycle
Cons
- Has monthly maintenance fees
- Higher-than-average minimum deposit to open an account
- Low APY (and option to earn higher is high threshold)
High-yield savings accounts
High-yield savings accounts (HYSAs) are popular with savers because they can offer returns more than 10 times better than a traditional savings account. Like their lower-yield counterparts, however, high-yield savings accounts have variable interest rates — so the rate when you opened your account may go up or down.
Because they don't have physical branches and are eager to attract new customers, online banks usually have the highest annual percentage yield (APYs) for HYSAs. There are often opening deposit minimums, however, and it's harder to get cash from your account: Online high-yield savings accounts (HYSAs) usually don't come with an ATM or debit card most banks restrict them to electronic transfers to a linked checking account, which can take several day to complete.
One of our top picks for high-yield savings accounts is from Marcus by Goldman Sachs, which offers a solid return with no account minimum or limit on the number of transfers or withdrawals you can make. There's no ATM card, but account holders can make same-day online transfers up to $100,000 to or from a linked external account.
Marcus by Goldman Sachs High Yield Online Savings
Annual Percentage Yield (APY)
3.40%
Minimum balance
None
Fees
No monthly maintenance, overdraft or excessive transactions fee
Maximum transactions
No limit to the number of withdrawals or transfers you can make
Checking account
No
ATM card
No
Terms apply.
Pros
- No minimum deposit, no minimum balance and no monthly fees, making it one of the most straightforward savings accounts to open and maintain.
- No limit on withdrawals or transfers, so you can move your money as often as you need without penalty.
- Earns a competitive APY with no conditions or hoops to jump through.
- Easy-to-use mobile app makes managing your savings simple from anywhere.
- Also offers no-fee personal loans through Marcus, a useful perk if you ever need to borrow.
Cons
- Higher APYs are available elsewhere, so it may not be the top pick if maximizing your rate is the priority.
- No checking account option, so you’ll need a separate account for everyday spending.
- No ATM access or debit card, making it best suited as a dedicated savings account paired with another bank.
Certificates of deposit (CD)
Opening a certificatesof deposit (CD) involves depositing funds for a set term, anywhere from three months to six years or longer. CDs have fixed rates, which mean you don't have to worry about your interest declining, but it also means you'll miss out if rates go up.
Interest on CDs can compound daily or monthly, though some options compound quarterly or even annually.
With a traditional CD, you can't withdraw funds before the maturity date without paying a penalty. (You also can't add more funds once the CD is opened.) At the end of the term, you receive your original deposit plus the accrued interest. So, when choosing a CD, start by deciding how long you can commit to locking up your money.
There are other types of CDs with different rules, including no-penalty CDs (which allow early withdrawals), add-on CDs (for making additional contributions), jumbo CDs (for large deposits) and brokerage CDs (which allow you to sell your CD before it matures).
One of our favorite options for CDs is Synchrony Bank, which offers competitive rates and no minimum balance requirement. You can choose from among nine term options, from three months to five years.
Synchrony Bank CDs
Annual Percentage Yield (APY)
0.25% to 4.50% APY
Terms
3 months to 5 years
Minimum deposit
None
Early withdrawal penalty
An early withdrawal penalty may be applied if you withdraw funds from the principal prior to the maturity date. For no-penalty CDs, withdrawals are not allowed within the first 6 days after account funding. After that, only the withdrawal of the entire balance is allowed.
Terms apply.
Pros
- Above-average APYs
- Nine term options, from 3 months to 5 years
- No minimum deposit
- Offers no-penalty, bump-up and IRA CDs
- If the rate increases within 10 days of account opening, you're automatically bumped up to the higher rate
Cons
- No physical branches
- No-penalty CD doesn't allow partial withdrawal
APYs are subject to change at any time without notice. Offers apply to personal accounts only. Fees may reduce earnings. For CD accounts, a penalty may be imposed for early withdrawals. After maturity, if your CD rolls over, you will earn the offered rate of interest for your CD type in effect at that time.
Money market accounts
Money market accounts (MMAs) are a bit of a hybrid, combining the interest-accruing power of a high-yield savings account with the liquidity of a checking account. So you can grow savings in your MMA, but you can also make direct withdrawals or purchases.
The best MMAs come with check-writing privileges, ATM or debit cards and fee reimbursements when you use an out-of-network ATM.
Ally Bank® Money Market Account
Annual Percentage Yield (APY)
Up to 3.00% APY
Minimum balance
None
Monthly fee
None
Offer checks?
Yes
Offer debit/ATM card?
Yes
Terms apply.
Pros
- Above-average APY with no minimum balance or monthly fees required to earn it.
- Comes with a debit card and check-writing privileges, giving you more flexibility to access your funds than most money market accounts offer.
- Fee-free access to 75,000+ ATMs nationwide, plus up to $10 per month in out-of-network ATM fee reimbursements.
- No overdraft fees, so you’re not penalized if your balance runs short.
Cons
- No physical branch locations, so all banking is handled online or by phone.
MMAs often require large minimum deposits to open and higher balances to earn the best interest rate. We like the Ally Bank Money Market Account because there's no minimum balance requirement or monthly maintenance. Members get fee-free access to 75,000+ ATMs in the Allpoint and MoneyPass networks, plus a $10 monthly credit for out-of-network ATM fees.
FAQs
What is a high-yield savings account?
There is no specific definition but a traditional savings account usually offers a lower interest rate than a high-yield savings account and is commonly available at brick-and-mortar banks. An HYSA provides a higher APY and is often offered by online banks.
What kind of savings account earns the most interest?
High-yield savings accounts typically offer higher annual percentage yields (APYs) than traditional savings accounts. Depending on the term, a CD may offer an even higher fixed rate, but your money is locked in for a set term.
What is the downside to a high-yield savings account?
While HYSAs typically have the best interest rates of any savings products, that rate is variable and can decline. Also, making withdrawals may require initiating an online transfer to a linked external checking account, which could take one to three days to clear.
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